Global cereal trade and utilization in 2021/22 revised down
12.04.2022 11:35 "Agro Perspectiva" (Kyiv) —
This month’s revisions to FAO’s estimates for the 2021/22 season largely reflect the impact of the conflict in Ukraine on grain markets, particularly those of wheat and maize. Port closures in Ukraine are seen significantly limiting exports from the country, while financial and freight challenges are hindering exports from the Russian Federation. These factors are likely to remain in effect for the remainder of the 2021/22 season. The expected loss of exports from the Black Sea region is seen manifesting itself in lower shipments from and to the region, as well as higher global prices, reduced imports, slower demand growth and smaller stocks than previously expected in several countries. Additionally, the situation has given rise to increased uncertainty in wheat and maize markets, a shift in trade flows and the application of export measures by several countries.
FAO’s world cereal production forecast for 2021 is marginally higher this month and now stands at 2 799 million tonnes, up 0.8 percent from the outturn in 2020. Now pegged at 1 206 million tonnes, global coarse grain production has been raised marginally this month owing to a small increase in the maize production estimate in Ukraine, where recent official data point to higher than previously expected yields. World wheat production is also up slightly and now stands at 777 million tonnes following an upward adjustment to Australia’s estimate. As for rice, production figures have been raised for Thailand based on higher official assessments of the size of the 2020 harvest and due to a strong area expansion in the 2021 secondary crop currently being harvested. By contrast, output has been cut for Indonesia, where officials reported that the third cropping cycle, concluded at the close of 2021, yielded less than previously anticipated due to dryness and continued area diversions. As a result of these changes, world rice production in 2021 is now predicted to reach 520.3 million tonnes (milled basis), up 0.7 percent from 2020 and an all-time high.
Looking ahead, FAO’s wheat production forecast for 2022 has been lowered slightly since the March estimate, largely as a result of the conflict in Ukraine, but it still points to an increase of 1.1 percent to 784 million tonnes. Wheat production in Ukraine is now forecast to fall below the five-year average, primarily reflecting expectations that at least 20 percent of the winter planted area may not be harvested due to direct destruction, constrained access or a lack of resources to harvest crops. Furthermore, yields are also expected to decline in 2022, as disrupted access to inputs and farmland is seen hindering the timeliness of agricultural operations. For the Russian Federation, continued conducive weather has bolstered harvest expectations and, based on reports from the country, wheat production is forecast at a level above the five-year average; however, this outlook remains preliminary particularly in consideration of uncertainties regarding the importation of some agricultural inputs. In the European Union, despite favourable conditions in most areas, persistent rainfall shortages in the southwestern areas are likely to curtail yields. Combined with a likely small decrease in plantings, total wheat production in the European Union is anticipated to decline year-on-year to 134 million tonnes in 2022. In North America, price-induced expansions in plantings in Canada and the United States of America underpin expectations of production increases. Wheat production is forecast at 31.2 million tonnes in Canada, a significant increase compared to the reduced outturn in 2021, and 53 million tonnes in the United States of America, where, however, long-term dryness is impairing yield prospects.
In Asia, the forecast for wheat production in Pakistan is cut back moderately this month due to reported input shortages and localized infestations of leaf rust that are likely to curtail yields. However, pegged at 28 million tonnes, wheat production in 2022 would still exceed the past five-year average. The wheat output in India is forecast to increase modestly in 2022. In Near East Asia, production in 2022 is forecast at average levels, while in North Africa, drought conditions in Morocco, western areas of Algeria and central Tunisia point to smaller harvests in 2022.
Regarding coarse grains, production prospects are still favourable in Argentina and Brazil, where maize harvests are forecast at well above-average levels in 2022. Notably in Brazil, despite dryness curbing minor maize season crop output, a large output from the main safrinha crop, which has just been planted, supports a record forecast of 112 million tonnes in 2022. In Southern Africa, maize production in South Africa is likely to fall year-on-year, owing to a cutback in plantings, but at 15 million tonnes, it would still represent an above-average output.
The forecast for global cereal utilization in 2021/22 has been lowered by 12.4 million tonnes from the previous report and now stands at 2 789 million tonnes, still 1.0 percent above the 2020/21 level. Wheat utilization in 2021/22 has been scaled down by 2.4 million tonnes due to lower feed use than previously expected, mostly in India and the European Union, on account of higher export forecasts. It is still forecast to increase by 1.2 percent from the 2020/21 level. Utilization of coarse grains in 2021/22 has also been lowered from the previous forecast by 10.5 million tonnes reflecting downward revisions to maize and barley utilization. The bulk of this month’s 6.8 million tonne downward revision to maize utilization is accounted for by lower domestic utilization in Argentina on account of the country’s higher export forecast, and in several countries driven by reduced global availability and high prices. Despite this month’s downward revision, maize utilization in 2021/22 is still expected to rise by 2.0 percent from 2020/21. World rice utilization in 2021/22 is forecast to expand by 1.8 percent year-on-year to reach a record high of 520.5 million tonnes. This level stands some 0.5 million tonnes above March expectations, reflecting higher than previously anticipated feed uses in China and Thailand, which outweighed slight downward adjustments to food intake in Brazil and Indonesia.
Global cereal stocks ending in 2022 are forecast to expand by 2.4 percent from their opening levels to almost 851 million tonnes, following an upward revision of 15 million tonnes from last month’s forecast. This month’s upward revision largely reflects higher wheat and maize stocks in Ukraine and the Russian Federation on account of lower export forecasts, resulting in upward adjustments of 4.5 million tonnes and 8.3 million tonnes to global wheat and maize stocks, respectively. However, these adjustments overshadow downward revisions made for several other countries. In some major exporters, the downward revision reflects larger exports, and, in many importing countries, especially in the Near East and North Africa, it is due to the expected loss of shipments from Ukraine and the Russian Federation. Nonetheless, global wheat and coarse grain stocks are now forecast to rise above their opening levels by 2.3 percent and 3.1 percent, respectively. Based on this month’s forecasts for stocks and utilization, the global cereal stocks-to-use ratio is forecast at 29.7 percent, slightly below the 2020/21 level of 29.8 percent but still indicating a relatively comfortable supply level. World rice stocks at the close of 2021/22 marketing seasons are now seen at a high of 192.7 million tonnes, up 1.2 percent year-on-year. This level stands 1.7 million tonnes above the March forecast, largely due to an upgrade to anticipated Thai reserves, which raised the major exporters’ aggregate stock forecast to a fresh peak of 55.4 million tonnes.
FAO’s forecast for world trade in cereals in 2021/22 has been lowered by 14.6 million tonnes since last month to 469 million tonnes, now pointing to a 2.0 percent contraction from the 2020/21 level. This month’s downward revision is largely attributed to lower wheat and maize export estimates for Ukraine and the Russian Federation and the resulting lower imports for several countries. Wheat export estimates for 2021/22 are lowered by 5.0 million tonnes for Ukraine and 3.5 million tonnes for the Russian Federation based on port closures in the former and financial and freight challenges in the later, as mentioned at the beginning. The resulting shift in demand is seen increasing wheat shipments from the European Union and India. However, those additional exports are expected to only partially compensate for the loss of exports from the Black Sea region. On top of near-record high prices, the reduced global availability is seen dampening import forecasts for several countries, especially in the Near East and North Africa. Following this month’s 4.2 million tonne downward revision, global wheat trade is now expected to remain near last season’s level. Similarly, the forecast for global trade in coarse grains has been cut by 10.4 million tonnes this month on account of downward revisions to maize export estimates for Ukraine and the Russian Federation in 2021/22 of 12.5 million tonnes and 2.0 million tonnes, respectively, based on challenges previously mentioned. As a result of shifting demand, greater shipments are expected for Argentina, India and the USA. However, as is the case for wheat, those exports are seen only partially compensating for the loss in exports from the Black Sea region. Overall lower availability and record high prices are seen reducing imports for several countries, bringing the global maize trade forecast down to 6.6 percent from the 2020/21 level. International rice trade in 2022 (January-December) remains forecast at 53.4 million tonnes, unchanged from March expectations and 3.8 percent above the 2021 all-time record.